[moritzwarhier]

Companies are treated like persons legally and while I'm sure there is too much bureaucracy in many places, I'm also sure that there are important documents that should be required.

For example to make sure that a company can be held responsible when it breaks the law.

There are already enough loopholes to disconnect legal responsibility from profit-taking, and not every company is benign.

Sure, if the documents cannot be acquired in X days for other reasons, that would undermine the tagline.

But I don't think that's the main risk.

Let's not forget that some requirements make sense.

In Germany, the government recently decided that some minor applications to local governments must be answered within X days or else are automatically approved.

But "minor" is important here... great for a small business that applies for a permit to renovate there outdoor seatings or whatever.

I wouldn't want for company foundings to be auto-approved without submitting the legally required documents.

[direwolf20]

> For example to make sure that a company can be held responsible when it breaks the law.

This is the reason Germany hates small companies. Germany wants you to be a sole trader with no liability shield.

Some people hack the system by registering a company in another EU state such as Lithuania.

[erispoe]

That's not a hack, if you operate the entity from Germany, it must be registered in Germany. It's often touted as a tax loophole, but it's not. Tax authorities do not care about you unless you actually make money, then they will come after you.

[jkaplowitz]

Would the liability shield not generally apply to a foreign entity registered in Germany? Sure there may be special rules for non-compliance with specific tax obligations, but I'm talking about for general liability for other purposes, like a contract signed by the entity where no personal guarantee was given, or a harm caused by the corporation where the owner was not personally involved or negligent in causing the harm.

[direwolf20]

Which law says it must be registered in Germany?

[johannes1234321]

It must be seated where the business happens for compliance with tax laws. But you may have a French S.a.r.l. in Germany and thus fall under their company law (with impact on publication responsibilities, company governance etc.)

While for some cases there is room for abuse (like Amazon Kindle eBooks are sold to Germany by a company situated in Luxembourg, while only selling via amazon.de to audience with German residency) However my employer is a Dutch B.V. with headquarters in Germany, thus they avoid having to form a board with works council representatives as a German GmbH (or AG) of comparable size would require.

[jkaplowitz]

Specifically, it must be seated where the principal management of the business occurs.

So if the executives and board meetings and books and records are strategically located in one country and most of the business operations are in a second, it's valid and probably even required for the business to have its tax residence in the first country rather than the second.

It may very well have a permanent establishment and therefore some tax obligations in the second country, but that's different from the second country being the primary tax residence.

[throwaway2037]

     > However my employer is a Dutch B.V. with headquarters in Germany, thus they avoid having to form a board with works council representatives as a German GmbH (or AG) of comparable size would require.

Damn, that's a pretty sleazy business practice. How do you feel about it? That would be a nice loophole to close.

[johannes1234321]

It's not that easy if you want European integration and support the idea of "freedom of settlement" also for companies, which to me makes sense and it is known that some countries try to pull companies to register in their legislation with sometimes improper means. I would prefer to focus on Irish taxation, which extracts value produced elsewhere to Irish benefit.

Workers rights are being unified, but that's a long complex process, as work cultures vary a lot and most companies fear German-style code termination, while it's an uphill battle to weaken it in Germany, thus it remains in national law's responsibility.

And to be clear:

a) works council exists with all normal rights, only they don't have board seats, which can be quite powerful, especially in public companies where one might form alliances with independent share holders. In the case here it's a 100% subsidiary of an American corporation, so they get their will one way or the other, board members may only delay

b) I am somewhat priviligedge as I am no simply replicable conveyor belt worker, but somewhat specialized engineer

c) I'm currently on garden leave period after 18 years in the company (incl acquisitions) due to a reduction, where works council produced a quite nice exit for me, so the only time I needed it, it worked well. But then I am somewhat privileged over others, making it hard to generalize.

[ratherbefuddled]

It's not that it must be registered (incorporated) in Germany. It's that for tax purposes if the company is run from Germany it will be considered "permanently established" and treated as resident there. Permanent establishment laws are often quite surprising to people doing business across different territories.

[jmaker]

Piercing the corporate veil is a very common practice across countries, both in civil and statutory cases as well as administrative cases. It’s a very fragile shell.

[egorfine]

There is a huge spectrum between "require impossible documentation" and "require none". Germany and EU are heading towards the former.

[Bewelge]

German here. That's not true. What crazy documentation do you require? An ID, proof of residence, and a business plan? (edit: you don't even need a business plan)

That being said, everything about the process is annoying and you always have the feeling that you're doing something wrong or forgetting something. Together with some ridiculously slow processing times, it's the perfect combination to frustrate you and I'm sure it ultimately reduces innovation.

But in reality, getting all the paperwork together is probably a couple of hours of work. You can buy services that do it for you for a couple of hundred Euros.

[ExoticPearTree]

> ... and a business plan?

Why would the government need a business plan?

It's none of their business what you want to do with your company besides a general description as "software development" or "consulting services" or whatever.

[logifail]

> It's none of their business what you want to do with your company

There are plenty of European member states that want the ability to control very precisely what you do with "your company". You want to call yourself "a software engineer"? Ooops...

In the EU it seems particularly the German-speaking countries are borderline obsessed with a) titles, and b) whom may use those titles. See, for instance, https://news.ycombinator.com/item?id=34096464

[BerislavLopac]

> it seems particularly the German-speaking countries are borderline obsessed with a) titles

There is nothing borderline about that - the German cultural space (including very much the countries of former Habsburg Empire) is still completely obsessed with titles and formal positions despite many of them losing any practical importance in modern times.

[hermanzegerman]

I like that you know what an Engineer is in German, and not the 1000 BS Meanings it has in the US

[Bewelge]

Actually I think I might be mistaken that you are even required to make a business plan. It's listed as one of the steps on the states portal about founding. But it goes on to say that it's not technically required, just highlights its importance.

https://www.existenzgruendungsportal.de/Navigation/DE/So-geh...

[dpc050505]

Several sectors of economic activities have the potential for atrocious externalities and it's absolutely the government's business to know about these and make sure that you're following regulation to minimize these externalities. When you make your employees the neighbours sick (or straight up kill them) it's an enormous failure on the part of government. It's easy to be oblivious to that when you only think about software.

Exhibit A: https://www.ctvnews.ca/montreal/article/battery-facility-acc...

[logifail]

Except it seems that it's often large companies - typically those with lots of lawyers - who seem to get away with what I can only describe as "corporate misdeads" most regularly.

"Following regulation" sounds great until it's revealed that corporate lobbyists have been helping (co-)write regulations to make sure that fair competition is quashed.

[eidjdj174]

It’s interesting how people can apply thinking like “there are problems, it’s not perfect, better not to try” to government, but also be pro starting businesses

[jagrsw]

I don't know much about corporations, but why business plans are needed at all? I mean, for EU citizens.

bank (loans), immigration and investors can be interested, but their interests are not covering every corporation out there.

[Xylakant]

There’s absolutely no need to have a business plan to start a company in Germany. You articles of incorporation and they state a company purpose, but this can be something as simple as “do IT consulting”.

Obviously, having a credible plan helps if you try to convince banks to loan you money or any such thing, but the act of registering a company requires no such thing.

[embedding-shape]

It's basically a proof of "most basic effort" that you're serious. You could probably note down some stuff on a single A4 and get it approved, it doesn't have to be a 40 page dossier.

Kind of like fizzbuzz, just something really simple and most basic to get rid of the "easy scams" and so on.

Edit: So "easy scams" are probably the wrong word, I initially wrote "riffraff" because in my mothertoungue that isn't so... disparaging, but what I meant was that it's used as "bare minimum filter" basically.

[zdragnar]

That doesn't really sound like a barrier to the easy scams at all. It just sounds like something someone once thought would be a good idea and now everyone has to do it because that's the process.

[whatevaa]

ChatGPT, give me a convincing sounding business plans for starting a bussiness in Germany.

Done.

[philipallstar]

How would this get rid of easy scams?

[petre]

Previous HN discussion about setting up a GmbH.

https://news.ycombinator.com/item?id=39959368

[dcrazy]

> business plan

This is the problem. Let me pivot. Let me fail. Let my investors (including myself) lose time and money in bad ideas.

All the bureaucracy in the world didn’t stop Wirecard, but it sure as heck demotivated people from trying something new in Germany.

[Xylakant]

There is no problem, because no business plan is required.

[embedding-shape]

Literally the whole effort this submission, is about is moving a tiny step towards "require none" but not go all the way, compared to how it is today. You chose the wrong submission to comment that on, in any "new regulation in EU" submission that might have been appropriate, but this move is quite the opposite of what you say is happening.

[egorfine]

> this move

My point is that this move will not happen. I don't believe EU can overcome a huge and extremely motivated army of bureaucrats.

[philipallstar]

This isn't an EU move, is it?

[embedding-shape]

> This isn't an EU move, is it?

What, exactly, do you mean with "EU move"?

I guess technically it's a "European Commission" move, but overall it's a European and EU move, unless "move" has some specific meaning to you.

[AnthonyMouse]

> For example to make sure that a company can be held responsible when it breaks the law.

In general this has nothing to do with incorporation documents.

If a company unintentionally causes a large amount of damages, the company is going to get wiped out, but then you're just having the judge order the bank to transfer the company's assets to the victims. The owners of the company aren't particularly relevant except insofar as they now own a company whose value has been zeroed out, and they might be the ones to show up in court to argue against that being what should happen.

If the people at a company intentionally cause a large amount of damages, the corporation is irrelevant. If your "corporation" is in the business of stealing catalytic converters and the police come to arrest you, the person with the sawzall in their hands is going to jail, and if that person was hired to do it they're going to be offered a deal to testify against the person who hired them etc. Pointing to your articles of incorporation at that point isn't going to save you. That isn't what LLCs do, actual criminal enterprises will frequently have not listed the true principals on the documents anyway, and the government is going to try to prosecute the perpetrators rather than the patsies on the documents.

There is no real point in making this a burden for honest people. If they're honest then it doesn't matter. If they're not honest then you'd be a fool to trust what they wrote on a form anyway.

[aaravchen]

Is that actually how corporations work in the EU?

Only having experience in the US, I can tell you conclusively that if the company states it's job is to make and promote poison for untrained people to spray everywhere, let's call it "CircleHeavenward" for example, and they successfully convince enough people to buy and use it, but then it's found they knowingly told people to spray it unsafely and knew it would kill millions of people but his it, and millions of the customers neighbors are now dying, absolutely nothing will be done. Because they're a successful corporation and therefore completely immune to any responsibility for any outright criminal activity. Doubly so it they can successfully claim more than one person was involved in carrying out that criminal activity, and therefore the responsibility for it is distributed.

[AnthonyMouse]

Syngenta got sued over paraquat and has already agreed to pay more than $100M to one set of defendants while still being actively sued by others. Corteva is paying in excess of a billion dollars over PFAS. Bayer/Monsanto is paying in excess of ten billion over glyphosate. That's only what they've already agreed to pay; others can still sue them for more.

A lot of stuff is e.g. you have an old study showing that glyphosate causes cancer in mice in amounts orders of magnitude higher than typical human exposure. Plaintiffs are going to claim that means they knew it was dangerous, and maybe that's even enough to win their lawsuit. But lots of things cause cancer in mice in excessive amounts. Can you prove beyond a reasonable doubt that they knew it would cause cancer in humans in ordinary amounts? If not then you don't have enough to put them in prison. Also, which "them" is it? If you want a person, the actually guilty party is typically not the CEO, it's a middle manager who made the decision three decades ago and is now a retired non-billionaire. If you collected enough evidence then you could potentially put a middle class grandpa in prison for it. The actual reason this doesn't often happen isn't that corporations are rich.

But also, what does this have to do with the bureaucracy involved in entity formation? Is your theory that making it harder to start a small business would somehow have made it more likely for Monsanto to be prosecuted for whatever they did? How?

[nicbou]

> In Germany, the government recently decided that some minor applications to local governments must be answered within X days or else are automatically approved.

I believe it was just a crazy idea that was submitted recently.

The closest real thing is 75 VwGO which requires a decision in 3 months. The immigration office has been failing to meet that requirement for years with few consequences, because enforcing that right is expensive and takes even longer.

[amluto]

In most (all?) US states, you can just start a company. You file a form, usually online, with the state, and you ask the IRS, online, for an ID number called an EIN. Technically you have a valid company after just step 1, but good luck getting any sort of bank account without doing step 2.

If you want to employ people, you need to file gratuitously obnoxious paperwork, but it’s still automatic.

What’s the actual problem? Why should it be harder?

Some states like California dislike small businesses in that they charge $800/year. But that’s pretty much it.

[egorfine]

> Why should it be harder?

Marx won. You should learn how easy it is to fire an employee in a software development company in Germany.

(spoiler: almost impossible)

[danielfoster]

This is admirable but the process in Germany right now is overly burdensome. It probably does weed out some bad actors (and good actors) not because of the documents required or any sort of checks performed, but because it takes months and costs thousands of euros.